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Should I File for Bankruptcy?

Bankruptcycan help to relieve some of the stress that comes with too much debt. However, it can’t resolve all of your problems. Filing for bankruptcy is a serious decision, and the question of whether you should file for bankruptcy is one that only you can answer. Here are some of the things that you’ll want to consider when deciding whether to file for bankruptcy.

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The Kind of Debt You Have

Whether a bankruptcy is appropriate, or even helpful, depends on the kind of debt you have. Not all debts can be cleared by bankruptcy. Credit card and consumer debt can be removed, and property loans and even mortgages may in some cases be absorbed through bankruptcy or restructured through payment options as part of a bankruptcy filing. However, tax debts and student loans cannot be removed in bankruptcy. Child support debts and alimony are not affected by bankruptcy proceedings, either, which means you won’t be able to get them liquidated or erased, even with a full Chapter 7 process.

The Cost of Waiting

Bankruptcy relief works best when you wait as long as possible before filing. You can only file for bankruptcy once every six years, so you can’t have additional debts cleared for quite some time. If you’re really at the end of your rope—and you’re not accruing any additional debt (for instance, ongoing medical expenses)–then it may be time to file for bankruptcy. But if your situation may improve with time or if you still have other avenues for managing your debt, you should wait. Keep in mind that you have other remedies available to limit debt collectors’ impact on your life even before you file for bankruptcy. Federal law doesn’t allow creditors to seize exempt property such as necessary possessions or all of your wages. Furthermore, creditors are limited in how much they can take from your wages; the maximum wage garnishment that all of your creditors combined can take out against you is 65 percent of your total income, and that includes child support or spousal support obligations.

The Other Options You've Tried

A number of services exist to help people manage debt and avoid bankruptcy. Some of these services will also help you to get debt collection measures to stop and even halt foreclosure processes. Bankruptcy is only something that you should attempt when none of these other options have worked for you. In fact, in Chapter 7 bankruptcy proceedings, documentation that you have tried these options will help demonstrate that you’ve made a good faith attempt to satisfy your debts, increasing the likelihood that your debts will be fully removed.

Your Ability to Comply with the Court's Requirements

Filing for bankruptcy isn’t a free ticket. State and county laws may impose requirements on those who file for bankruptcy. Courts often require individuals who file for bankruptcy to participate in debt management classes. These courses come with additional fees and can take a fair amount of time. You should find out about any such requirements before you file for bankruptcy and make sure you’re capable of meeting them. If you can’t pay for a class, for instance, you may need to pursue other options. If you really need to declare bankruptcy but cannot comply with the general requirements, contact the appropriate office in your courthouse and request an exemption.

Talking to a bankruptcy lawyer is the best way to figure out whether you should file for bankruptcy. We can help you find a lawyerin your area.

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This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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